Exhibit 10.7
DEFERMENT AGREEMENT
AGREEMENT dated December 31, 1993 between M/A-COM, Inc. (hereinafter the
"Corporation") and Paul E. Tsongas (the "Director").
WHEREAS, the Director is or is about to become a member of the Board of
Directors of the Corporation; and
WHEREAS, the Corporation has agreed to pay fees to the Director for his
service as a director of the Corporation; and
WHEREAS, the Director desires to defer the receipt of his fees as set forth
in this Agreement;
NOW, THEREFORE, the Corporation and the Director agree as follows:
1. ELECTION OF DEFERMENT. The Director may file with the Corporation at any
time an election to defer (i) all of the compensation earned as a director
for attending directors and committee meetings during any calendar year,
and/or (ii) all or any portion of his annual Director's fee, payable with
respect to such year, such election to be made in the form of Exhibit 1.
Revocation of any such election may be effected by filing with the Corpo
ration written notice of revocation in the form of Exhibit 3. The last
election filed before January 1 of such year or, for the year in which he
first becomes a director of the Corporation, before his first term as
director of the Corporation begins, shall determine the percentage of the
Director's fees to be deferred for that calendar year (or the balance
thereof) and each subsequent calendar year until revoked not later than the
close of the calendar year preceding that with respect to which such
revocation is to be effective. If the Director shall have filed no election,
he shall be deemed to have elected 0% as the percentage to be deferred for
all years until he shall have filed an election.
2. THE DIRECTOR'S DEFERMENT ACCOUNT. The Corporation shall maintain a
Deferment Account for the Director to which the following credits shall be
made:
2.1. Elected Percentage. As of December 31 of each year, the
Corporation shall credit to the Director's Deferment Account the portion of
his fees for that year which he elected to defer.
2.2. Interest Equivalent. As of the end of each calendar quarter,
whether before or after maturity of the Deferment Account, the Corporation
shall credit to the Director's Deferment Account an amount equivalent to
interest at the Subject Rate (as hereinafter defined) on the balance standing
to the credit of the Account at the end of that calendar quarter.
2.3. Subject Rate. The Subject Rate for each calendar quarter shall be
the "Prime Lending Rate" of interest charged by the First National Bank of
Boston, or its successors or assigns, as of the last day of the preceding
calendar quarter.
3. PAYMENTS TO THE DIRECTOR OR HIS BENEFICIARY. The Corporation shall make
payments to the Director or his beneficiary as follows and shall make
appropriate debits to the Deferment Account to reflect those payments:
2
3.1. Maturity of the Deferment Account. The Deferment Account shall
mature on the first of the following events:
(a) December 31 of the year in which occurs the Director's 65th
birthday; unless the Director shall choose to defer such payments until his
Retirement from the Board of Directors, in which case payment shall occur
beginning December 31 of such retirement year;
(b) December 31 of the year in which the Director dies;
(c) The date of the adoption of a vote of the shareholders of the
Corporation for (i) the dissolution, liquidation or winding up of the affairs
of the Corporation, whether voluntary or involuntary, or (ii) the sale,
conveyance or transfer of all or substantially all the Corporation's assets.
3.2. First Payment. Within thirty (30) days after the maturity of the
Deferment Account, the Corporation shall pay to the Director an amount equal
to twenty-five percent (25%) of the balance then standing to the credit of
his Deferment Account.
3.3. Subsequent Payments. During the month of January in each of the
first three years following the year in which the first payment was made, the
Corporation shall pay to the Director amounts equal to the following
percentages of the balance standing to the credit of his Deferment Account on
the respective dates of payment:
Year Following
First Payment Percentage
First 33 1/3%
Second 50%
Third 100%
3.4. Other Payment Provisions in Case of Death. If the Director dies
before all payments shall have been made to him, payments shall be made in
the manner and at the times provided in Sections 3.2 and 3.3 of this
Agreement to his beneficiary designated on the form attached as Exhibit 2,
provided, however, that, at the sole discretion of the Corporation's
Compensation Committee, such payments may be accelerated and paid in such
greater amounts and at such earlier times as the Compensation Committee
determines. Upon the death of such beneficiary prior to his receipt of all
such payments, the entire unpaid balance thereof shall be paid in a lump sum
to the estate of such beneficiary. In default of any designation of a
beneficiary by the Director, all amounts remaining unpaid upon his death
shall be paid in a lump sum to his estate.
4. NATURE OF CLAIM FOR PAYMENTS. The benefits provided under this Agreement
shall be payable from the general assets of the Corporation, and to the
extent not so paid, from the assets of a grantor trust established for the
benefit of the Director pursuant to a trust agreement substantially in the
form attached hereto as Exhibit 4 (the "Grantor Trust"). Upon the occurrence
of a Change in Control, a Corporate Transaction or the termination of the
Director's membership on the Board of Directors for Good Reason, the
Corporation must as soon as possible, and in no event more than thirty (30)
days after such occurrence, transfer to the Grantor Trust maintained for the
Director assets sufficient (in combination with the assets, if any, then
existing in the affected Grantor Trust) to provide the anticipated benefit of
the Director hereunder, but at no time shall the Director nor any beneficiary
3
have any right, title, or interest superior to that of a general unsecured
creditor of the Corporation, in or to any asset or assets of any Grantor
Trust or of the Corporation. The Corporation shall provide to the
Compensation Committee copies of the trust agreement under which the Grantor
Trust is established and maintained.
5. ADMINISTRATION.
5.1. Plan Administrator. The Corporation's Compensation Committee (the
"Committee") will administer payments and claims for payment under this
Agreement.
5.2. Procedure. The Committee may take any decision or action in
connection with this Agreement by a majority (but not less than two (2)) of
its members. Decisions in connection with this agreement may be made and
evidenced by a written document signed by a majority of the Committee's
members, without a formal meeting of the Committee.
5.3. Cooperation with Trustee. The Committee shall promptly provide to
the Trustee of the Grantor Trust described in Section 4 (the "Trustee") and
to any accountant, attorney or other professional designated by the Trustee
copies of all beneficiary designations, claims for benefits and elections of
form of benefits filed with the Corporation pursuant to this Agreement, and
such information as to compensation and other information that the Trustee
may request in connection with this Agreement.
5.4. Duties. In addition to the powers and duties specified elsewhere
in the Plan, the Committee shall:
(a) determine whether and when the status of the Director as a
member of the Corporation's Board of Directors has been terminated and, to
the extent material to a determination of a payment hereunder, the cause of
such termination; and
(b) decide all questions which may arise from time to time with
respect to the rights under this Agreement of the Director and any other
persons who claim to be entitled to payment hereunder.
Subject to 5.9, the Committee shall have exclusive discretionary
authority to construe and interpret this Agreement.
5.5. Indemnification. The Corporation agrees to indemnify and save
harmless each member of the Committee and any delegate of the Committee
against any and all liability occasioned by or arising out of any action with
respect to this agreement taken, suffered or omitted in good faith by him.
5.6. Delegation. The Committee may authorize one or more of its
members, or the Secretary of the Compensation Committee to sign on its behalf
any instructions or other documents with respect to this Agreement.
5.7. Claims Procedure. The Director and any other person claiming a
benefit under this Agreement must complete and file such application forms as
the Committee may reasonably require. The Committee will from time to time
designate one of its members to review all applications for benefits. The
reviewer shall advise the Committee in writing, with a copy to the Trustee,
of his determination as to the right of any claimant to a benefit. Unless one
or more members of the Committee object to his determination within ten (10)
business days after the date of such written advice, the reviewer shall
4
communicate his determination to the claimant (with a copy to the Trustee) in
accordance with the next following paragraph of this Section 5.7. In the
event of such an objection, the Committee shall determine the rights of the
claimant.
The reviewer shall notify the claimant in writing of the decision as to
the claim within thirty (30) days of the reviewer's receipt of the claimant's
application. If special circumstances require any extension of time (not to
exceed thirty (30) days) for processing the claim, the claimant will be
notified in writing of the extension, before the expiration of the initial
thirty (30) day period. Any denial of a claim for benefits will be set forth
in writing, delivered or mailed to the claimant, specific reasons for the
denial and, if applicable, a description of additional material or
information necessary for the claimant to perfect his claim. If the reviewer
rejects an application solely because the claimant failed to furnish certain
necessary material or information, the notice shall explain what additional
material is needed and why, and advise the claimant that he may refile a
proper application under this claims procedure.
5.8. Appeal and Review Procedure. A claimant may appeal the denial of
a claim pursuant to Section 5.7 by submitting to the Committee a written
request for review of the denial, with a copy to the Trustee, within thirty
(30) days after he receives written notice of denial (or, if he has received
no such written notice of denial within the time prescribed in Section 5.7,
within forty-five (45) days after the submission of his application forms to
the Committee). A claimant may also submit a written statement of issues and
comments concerning his claim, and may request an opportunity to review this
Agreement and any other pertinent documents, which the Committee shall make
available to him at a convenient location during regular business hours
within thirty (30) days after its receipt of the request.
The Committee will set forth its final decision in writing citing
specific reasons for the decision, and will transmit its written decision to
the claimant (with a copy to the Trustee) by Certified Mail within thirty
(30) days after its receipt of the claimant's request for review.
5.9. Claims in Special Circumstances. Notwithstanding the fore-going
sections of this Section 5, upon the occurrence of a Change in Control or a
Corporate Transaction, the Trustee shall succeed to the duties and authority
of the Committee pursuant to Section 5.7 and 5.8, and in the event of the
termination of the Director's membership on the Board of Directors for Good
Reason, the Trustee shall succeed to the duties and authority of the
Committee pursuant to Sections 5.7 and 5.8 as to claims for benefits. To the
extent necessary to implement its succession to the duties and authority of
the Committee pursuant to Sections 5.7 and 5.8, the Trustee shall also
succeed to the authority of the Committee pursuant to the final sentence of
Section 5.4.
5.10. Definitions. "Cause" means any of the following: (a) the
willful and continued failure (other than by reason of incapacity due to
physical or mental illness) of the Director to perform satisfactorily the
duties consistent with his title and position reasonably required of him by
the Board after a written demand for substantial performance is delivered to
the Director by the Board, which demand specifically identifies the manner in
which the Board believes the Director has not satisfactorily performed his
duties; (b) the commission by the Director of a felony, or the perpetration
by the Director of a dishonest act or common law fraud against the
Corporation or any of its subsidiaries; or (c) any other willful act or
5
omission which is injurious to the financial condition or business reputation
of the Corporation or any of its subsidiaries; provided, however, that no act
or failure to act shall be deemed "willful" unless done, or omitted to be
done, not in good faith and without reasonable belief that the act or
omission was in the best interest of the Corporation.
"Change in Control" means any occasion upon which an individual,
corporation or other entity (hereinafter, a "Person") becomes the beneficial
owner of twenty percent (20%) or more of the outstanding shares of common
stock of the Corporation, other than a merger in which either (a) the
Corporation is the continuing corporation and none of its outstanding common
stock is reclassified, or (b) the Corporation is not the continuing
corporation or its outstanding common stock is reclassified, but the merger
or reclassification has been approved by affirmative votes of the requisite
number of holders of securities of the Corporation present or represented
and entitled to vote at a meeting duly held to vote on the merger in
accordance with the applicable corporate law of the Commonwealth of
Massachusetts and the by-laws of the Corporation.
A person shall be deemed to be the beneficial owner of shares of common
stock which are beneficially owned, directly or indirectly , by any other
Person (a) with which it or its "affiliate" or "associate" (as hereinafter
defined) has any agreement, arrangement or understanding for the purposes of
acquiring, holding, voting or disposing of stock, or (b) which is its
"affiliate" or "associate." A Person is an "affiliate" of another Person if
the former directly, or indirectly through one or more intermediaries,
controls, is controlled by, or is under common control with, the latter; and
a Person is an "associate" of (x) any corporation or organization (other than
the Corporation or any of its subsidiaries) of which such person is an
officer or partner or is, directly or indirectly, the beneficial owner of ten
percent (10%) or more of any class of equity securities, (y) any trust or
estate in which such person has a substantial beneficial interest or as to
which such person serves as trustee or in a similar fiduciary capacity, and
(z) any relative or spouse of such person, or any relative of such spouse,
who has the same home as such person or who is a director of the Corporation
or any of its subsidiaries.
"Corporate Transaction" means a transaction (including, without
limitation, a merger, consolidation, sale of substantially all of the
Corporation's assets, liquidation or recapitalization of the Corporation's
common stock) in which the common stock of the Corporation is changed into or
exchanged for securities of another corporation, or interests in a non-
corporate entity, or other property, unless effective as of the date of the
transaction, the entity that carries on the business of the Corporation after
the transaction assumes the obligations of the Corporation under this
Agreement, or adopts an agreement substantially similar to this Agreement and
providing benefits substantially similar to the benefits provided under this
Agreement immediately before the transaction.
"Good Reason" means any of the following, in the absence of Cause: (a)
failure of the Corporation to nominate the Director for election to the Board
of Directors, (b) removal of the Director from the position described in
clause (a); or (c) substantially reducing the Director's annual fees from
their levels when he entered into Amendment No. 1 to this Agreement, or any
level established thereafter with the Director's agreement.
6. RIGHTS NON-ASSIGNABLE. Neither the Director nor any beneficiary shall
have any right to assign or otherwise alienate the right to receive payments
6
hereunder, in whole or in part, which payments are expressly agreed to be non-
assignable and non-transferable, whether voluntarily or involuntarily.
7. REPORTS TO PARTICIPATING DIRECTORS. Within thirty (30) days following
the close of each calendar year prior to full payment to a Director or his
beneficiary of the balance standing to the credit of his Deferment Account,
the Corporation shall furnish to such Director or beneficiary, as the case
may be, a statement of account reflecting all transactions in such Director's
Deferment Account during the preceding calendar year, including the balance
in such Account as of the close of the year.
8. SUCCESSORS. This Agreement shall be binding upon and shall inure to the
benefit of the Corporation, its successors and assigns, the Director and his
personal representatives.
9. GOVERNING LAW. This Agreement shall be construed in accordance with and
governed by the Laws of the Commonwealth of Massachusetts.
Signed and sealed on the date first written above.
/s/ Paul E. Tsongas
Paul E. Tsongas, Director
80 Mansur Street
Lowell, Massachusetts, 01852
M/A-COM, Inc.
By: /s/ Robert H. Glaudel
Robert H. Glaudel
Senior Vice President
Human Resources
7
Exhibit 1
ELECTION OF DEFERMENT
December 31, 1993
M/A-COM, Inc.
401 Edgewater Place, Suite 560
Wakefield, MA 01880-6210
Gentlemen:
In accordance with the provisions of the Deferment Agreement dated December
31, 1993 between M/A-COM, Inc. and the undersigned, I hereby elect to defer
100% of the annual Director's fees, 100% of the compensation payable to me
for attending directors and committee meetings during calendar year 1994. I
understand that this election is irrevocable as to that calendar year and as
to each succeeding calendar year until revoked in writing or superseded by a
new election, in either case filed not later than the last day of the
calendar year preceding that with respect to which said revocation or new
election is to be effective.
Very truly yours,
/s/ Paul E. Tsongas
Paul E. Tsongas, Director
Receipt of this election is hereby acknowledged this 31st day of December,
1993.
M/A-COM, Inc.
/s/ Robert H. Glaudel
Senior Vice President
Human Resources
8
Exhibit 2
DESIGNATION OF BENEFICIARY
December 31, 1993
M/A-COM, Inc.
401 Edgewater Place, Suite 560
Wakefield, MA 01880-6210
Gentlemen:
In accordance with the provisions of the Deferment Agreement dated December
31, 1993 between M/A-COM, Inc. and the undersigned, I hereby designate Nicola
Tsongas* as my beneficiary to receive payments thereunder in the event of my
death before payments in full thereunder have been made. In the event said
beneficiary predeceases me, I hereby designate of
* as beneficiary in his stead.
Very truly yours,
/s/ Paul E. Tsongas
Paul E. Tsongas, Director
* If more than one beneficiary is to be designated, add a page listing the
beneficiaries and specify the percentage of each payment to be received by
each beneficiary.
9
Exhibit 3
REVOCATION OF ELECTION
Date
M/A-COM, Inc.
402 Edgewater Place, Suite 560
Wakefield, MA 01880-6210
Gentlemen:
In accordance with the provisions of paragraph 1 of the Deferment Agreement
dated between M/A-COM, Inc. and the undersigned, I
hereby revoke my previous election to defer my annual Director's fee and
compensation payable to me for attending directors and committee meetings,
effective January 1, 19 .
Very truly yours,
Director
Receipt of this revocation is hereby acknowledged this day of
, 19 .
M/A-COM, Inc.
Title